Posts Tagged ‘fuel’

[Editor's note: Beautiful, compact map in Thursday's paper showing 4 main natural gas pipelines feeding Europe from Russia on a globe. I think this map is by Laris Karklis. He even has the Arctic Circle on there!]

MOSCOW, Jan. 7 — Since the fall of the Soviet Union, Russia and Ukraine have wrangled over fuel prices, with both sides holding a powerful bargaining chip. Russia has had the natural gas Ukraine needs to power its industries. Ukraine has owned the pipelines Russia depends on to transport the gas it sells to Europe.

The two have often engaged in brinkmanship, threatening to cut off deliveries. But they have never followed through on the threats for very long – until now.

A confluence of factors tied to the global economic crisis and political uncertainty in both countries have altered the dynamics of the annual dispute. For the first time, Russian gas deliveries to Europe through Ukraine came to a complete halt Wednesday, as the standoff between the two countries stretched into a seventh day.

Russia accused Ukraine of shutting down pipelines that deliver a fifth of the continent’s fuel, while Ukraine charged that Russia had simply stopped sending gas. With more than a dozen countries scrambling to maintain heat and electricity amid a bitter cold snap, the European Union urged both countries to accept international monitors to verify gas flows.

Direct talks were scheduled to resume Thursday, but analysts said progress would be difficult for the same mix of economic and political reasons that led the two nations to dig in this week instead of compromising, as they had done in years past.

With its economy in deep trouble, Ukraine has little to lose by using its control of European fuel shipments to resist Russia’s demand for a price increase. By contrast, Russia is suffering huge losses in immediate gas revenue and enormous damage to its reputation as an energy partner seeking European investment. Yet political considerations seem to have prevented the Kremlin from surrendering.